Dear Dan: I don’t know how other business owners are feeling, but I’m in a circle-the-wagons mood these days. Am I more pessimistic about the poor economy? – Pessimist
Dear Pessimist: A stark and dramatic shift in the economic thinking of U.S. small-business owners is under way. Expectations for growth, spending, hiring and profits are reaching levels unseen in 20 to 30 years or more.
Small-business optimism – as measured by such things as capital-spending plans, inventory levels and sales expectations – has plunged. It’s the longest string of recessionary readings the Small Business Optimism Index has produced since the National Federation of Independent Business (NFIB) started tracking it in 1973.
A prolonged economic slump combined with rising costs and inflation is forcing small-business owners to conserve cash, lower costs and become even more bottom line focused. Sales growth, always a key driver, is making way for a cost-consciousness comeback. Here are six tactics with bottom line boosting potential:
1) Tap Tax Benefits: Don’t overlook the juicy tax benefits available this year on equipment purchases. New rules give a giant boost to the amounts that smaller businesses can “expense” – which means write-off immediately, as opposed to depreciate slowly over time.
2) Review Your Vendors: Consider all vendor relationships up for grabs. Look for a better deal on merchant accounts, bank loans, shipping, insurance, legal services and hauling your trash.
3) Time and Attendance: New time and attendance solutions for small business, including Web- and PC-based systems, remote systems and high-tech time clocks are replacing paper time sheets and mechanical clocks at a rapid clip.
4) Use Independent Contractors: Many bottom line-wary business owners are turning to independent contractors rather than adding full-time employees. “Contract workers” can perform a variety of functions while saving you a bundle in payroll taxes, insurance, benefit costs and training. They also offer flexibility to stop and start more quickly.
5) Switch to SEM: Call it search engine marketing (SEM), keyword advertising, pay-per-click (PPC) or cost-per-click (CPC) – whatever name you use spells the same thing: A great, cost-effective way for small businesses to reach prospects anywhere, anytime.
6) Speed Up Collections: You may be tempted to stretch terms and extend deadlines before deciding on a formal collection effort. But recognize that the longer you wait, the less likely you are to collect your cash. •
Daniel Kehrer can be reached at
editor@business.com.
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